rediff.com
rediff.com
Money Find/Feedback/Site Index
      HOME | MONEY | BUDGET 2000-2001

February 26, 2000

Books
Budget Special
Columnists
Indian Tax
Insurance
Interview
Mutual Funds
NRI Tax
Personal Finance
Personal Banking
Real Estate
Stocks

Sector report: Fertilisers

Dun and Bradstreet India

E-Mail this report to a friend

Input
Rock phosphate, phosphoric acid, natural gas, naphtha, sulphur, ammonia.

Key Players

  1. Nitrogenous: Fertiliser Corporation of India, Indo Gulf Corporation, IFFCO, Chambal Fertilisers & Chemicals, Nagarjuna Fertilisers, SPIC, Tata Chemicals.
  2. Phospatic: Coromandel Fertilisers, EID Parry, Fertilisers & Chemicals Travancore, Godavari Fertilisers & Chemicals, IFFCO, SPIC, Zuari Agro Chemicals.

Tax Structure
Item   1999-2000
  Basic Duty Surcharge
Urea, DAP, Muriate of Potash, NPK and P&K 5 Nil
Phosphoric acid, Anhydrous Ammonia and Rock Phosphate 5 10
     
Item ( Rs Million) 1998-99 1999-00
Indigenous fertiliser (Urea) 73,600 80,000
Imported fertiliser (Urea) 2,380 7,500
Decontrolled phosphatic and potassic fertilisers 37,900 45,000

Review

  • India is the third largest producer and consumer of nitrogenous and phosphatic fertilisers in the world.
  • Per capita consumption of fertilisers at 95.3 kg a hectare is way below China's 262.2.kg a hectare. The world average stands at 90.6 kg a hectare.
  • Farm gate prices of urea (which is fully controlled by the government) have increased at a compound annual growth rate of 5 per cent. Increasing raw material prices and fertiliser consumption have resulted in huge subsidy bills for the government.
  • The Hanumantha Rao Committee report has recommended deregulation of the fertiliser industry and introduction of a new pricing method based on long run marginal cost instead of unit-wise retention pricing mechanism. Under this new pricing methodology, open distribution of fertilisers is contemplated, implying abolition of allocation under the Essential Commodities Act. Also, the government would be required to notify ceiling farm gate prices annually.
  • Industry response has been mixed on the committee report and as a result, most new investments have been deferred.

Expectations from the Budget

  • While the farm gate price of urea would have to be increased in line with the World Trade Organisation (WTO) agreement to reduce the Aggregate Measurement of Support (AMS), no significant change is expected immediately.

ALSO SEE:

What will Yashwant Sinha do?

How will personal taxes change?

Fiscal report card

SECTOR ANALYSIS:




Tell us what you think of this special feature

HOME | NEWS | BUSINESS | MONEY | SPORTS | MOVIES | CHAT | INFOTECH | TRAVEL
SINGLES | NEWSLINKS | BOOK SHOP | MUSIC SHOP | GIFT SHOP | HOTEL BOOKINGS
AIR/RAIL | WEATHER | MILLENNIUM | BROADBAND | E-CARDS | EDUCATION
HOMEPAGES | FREE EMAIL | CONTESTS | FEEDBACK
Disclaimer